Business Needs A Prolonged Period Of Low Interest Rates

The British Chambers of Commerce (BCC) threw its full support behind the Monetary Policy Committee’s decision to maintain interest rates at 0.5% today. Commenting on the decision, David Kern, the business group’s Chief Economist, said:

"We fully support the decision to maintain interest rates at 0.5% and the size of the Quantitative Easing programme at £200 billion. Given the dangers still facing the economy, the MPC must persevere with expansionary policies that help businesses to invest and grow.

“Any consideration of raising interest rates or reducing the QE stimulus must be delayed until there is concrete evidence that economic growth is secure. The UK’s recovery is fragile and businesses are still facing acute pressures. The threat of a double-dip recession remains serious at this early stage of the upturn – not least because of the risks emerging from the eurozone. Tightening monetary policy in the current circumstances could be very damaging.

“The coalition government’s determination to deal with the deficit should make it easier for the MPC to keep interest rates low for a prolonged period. If unemployment rises significantly, it may again become necessary to consider expanding the QE programme.”